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THE MINISTRY OF TRADE CIRCULAR No

THE MINISTRY OF TRADE CIRCULAR No. 4-TM/XNK ISSUED ON APRIL 4, 1994, TO GUIDE THE IMPLEMENTATION OF DECISION No. 78-TTg, ISSUED ON FEBRUARY 28, 1994, BY THE PRIME MINISTER

On the 28th of February 1994, the Prime minister issued Decision No. 78-TTg, which governs import and export activities in 1994. On the 18th of March 1994, the Government Office issued Document No. 1319-KTTH, which summarizes the opinions of the Prime Minister on the List of items to be imported and exported in line with the orientational plan.

After consulting with the General Customs Office, the Ministry of Trade issued the List number 1 which is the List of Goods Banned from Import and Export (Decision No. 238-TM./XNK on March 24, 1994). The Ministry of Trade now provides the following guidance for State management of the import and export items in the following remaining Lists:

Part I

THE MECHANISM FOR MANAGEMENT AND BUSINESS OF THE IMPORT AND EXPORT ITEMS IN EACH LIST

A. LIST OF QUOTA-CONTROLLED EXPORT ITEMS

(List 2)

The overall idea is to minimize import and export items that are controlled by quotas. This list applies only to goods that Vietnam is committed to export under trade agreements with foreign countries. Concretely, there shall be only two export items:

- Garments and textiles to export to the EU, Canada and Norway,

- Sliced manioc to export to the EU.

1. The mechanism for management and business is as follows: Exports of garments and textiles, to the EU, Canada and Norway, shall be conducted under Inter-Agency Notification 8-TBLB dated December 3, 1993, of the Ministry of Trade and the Ministry of Light Industry. Exports of sliced manioc to the EU shall be conducted under Document 6236-KTTH dated December 4, 1993 of the Office of the Government.

2. Exports of garments and textiles to markets other than the EU, Canada and Norway are free from quotas (including exports of garments and textiles to Norway outside the quota list); exports of sliced manioc to markets outside the EU are also free from quotas.

B. LIST OF IMPORT AND EXPORT ITEMS UNDER ORIENTATIONAL PLAN

(List 3)

Exports:

1. Crude oil;

2. Rice;

3. Wood and rattan products.

Imports:

1. Petroleum (except lubricants);

2. Fertilizers: Urea, DAP;

3. Steel;

4. Portland cement;

5. Explosives;

6. Fiber (which is not domestically producible or is produced below domestic demand);

7. Cloth (which is not domestically producible or is produced below domestic demand);

8. Jute bags;

9. Paper (which is not domestically producible or is produced below domestic demand);

10. Materials and additives to produce rolled cigarettes;

11. Sugar;

12. Milk;

13. Home electronic appliances and components;

14. Motor bikes and components;

15. Motor vehicles of less than 12 seats and components.

The mechanism for management and business is as follows:

I. General provision:

1. Five groups of goods which include crude oil and rice for export, along with petroleum (except lubricants), fertilizers (Urea and DAP), steel and explosives for import are related to the major balances of the economy. They are therefore managed by the State, which appoints a number of competent enterprises to handle them. These enterprises are referred to as clue dealers.

The clue dealers are enterprises which are licensed to handle the import and export of the said goods, which have access to overseas markets, clientele, which possess competence and experience in the import and export businesses, and which are jointly selected by the Ministry of Trade, the managing Ministry and the owning agency (of the ministerial or provincial level). The clue dealers shall be assigned by the State to trade at a volume from about 50% to 70% of the total volume designated by the Prime Minister for the said goods in the year (except for crude oil which is handled under a separate regulation).

In order to avoid monopoly caused by over-concentration into the clue dealers, and also to respect the right to business of the enterprises, other businesses which are licensed to import and export the said goods and have the capability to trade in the same conditions as the clue dealers are allowed to trade in the remaining 30% to 50% of the total volume.

These ratios are understood as orientational plans, not as quotas or fixed volumes. They are subject to changes based on the implementing capabilities of the enterprises. If the clue dealers have the capability to secure clientele and favorable trade conditions, they are allowed to trade in volumes exceeding the 50%-70% limit reserved for them. Inversely, if the other businesses have clientele and favorable trade conditions, they are allowed to trade in any remaining volume reserved for the clue dealers after they have finished the trading in their orientational plans. In case all the enterprises have traded (or not traded) the volume approved by the Prime Minister at the beginning of the year, and the market still has demand (or already has a saturation), the Ministry of Trade shall, together with the managing Ministry and the State Planning Committee, propose that the Prime Minister increase (or decrease) the orientational plans.

2. An enterprise possessing of the following conditions shall be considered for importing groups or individual items of goods listed in the orientational plans:

- Licensed to import and export the subject goods;

- In 1993, it directly (i.e. not through its mandated enterprises) imported all of the volume assigned to it by the Ministry of Trade;

- The requisite file (compiled as instructed below) has been sent to the Ministry of Trade within the allotted time.

A business, which has the need to trade and meets the above-mentioned conditions should send an application to the Ministry of Trade. The application is composed of:

- A note clearly specifying the import requirements for the period from the 1st of April, 1994, to the 31st of March, 1995; and

- The license for import-export business (photocopy).

3. The Ministry of Trade shall give the enterprises their import volumes in two assignments, in April and September 1994. The two assignments shall not exceed the total which has been set for 1994 by the Prime Minister.

The Ministry of Trade shall not request the enterprises to come directly to its head office to seek approval for their requested import volumes. They shall send their dossiers to the office only.

4. In monitoring imports handled by the enterprises, the Ministry of Trade has the right to transfer the assigned import volumes from enterprises which lack capability to fulfill them to those which meet the requirements and conditions to market the import.

II. Detailed Provisions:

- For export items:

1. Crude oil: The only export dealer is Petechim, which shall handle the export according a separate regulation.

2. Rice: Export shall be handled according to a separate regulation.

3. Products made of wood and rattan: Exports shall be carried out according to Document No. 624-CP dated December 29, 1993, of the Government and, under the guidance of the Ministries of Forestry and Trade (The Prime Minister has decided that products made of wood and rattan are considered goods controlled by orientational plans, therefore they shall not be listed among goods controlled by quotas as specified in Document No.624-CP of December 29, 1993).

- For import items:

1. Petroleum (except for lubricants): In 1994, this import will continue to be assigned to the five previous clue dealers, namely Petrolimex, Petechim, Saigon Petro, Kerogazimex and Airimex (Airimex will continue to be the dealer specialized in the importation of fuel for civil aviation service until the Civil Aviation Administration appoints a substitute enterprise which is licensed for the import and export business). These dealers shall directly sign import contracts for 100% of the orientational total reserved for the clue dealers themselves and the 30% reserved for enterprises which are not clue dealers assigned to handle the import.

Enterprises which are not clue dealers and which want to import petroleum shall have to seek license from the Ministry of Trade when they have met the following conditions:

- Have the function of trading in petroleum (stipulated in the establishment decision);

- Have specialized in transport facilities;

- Have a system of storage tanks and reservoirs;

- Have a system for accurate measuring and pumping;

- Have a system of gasoline stations in an area covering at least one province or city directly attached to the Central Government;

- Have the facilities and equipment for explosion control, fire control, fire extinguishment, etc., to ensure safety;

- Have a staff knowledgeable in the business of petroleum.

Upon approval of their requests, they shall pick one of the five clue dealers to assign the handling of their imports.

The volumes already assigned to the five clue dealers under Document No.11376-TM/KH issued on December 11, 1993, are orientational plans only.

Regarding re-export, the orientational volume for imported petroleum in 1994 does not include the amount for re-export. Only the clue dealers and the enterprises that have adequate capacity for trade in petroleum shall be allowed to re-export it. The Ministry of Trade shall consider and set the amount of petroleum to be re-exported under contracts with foreign customers.

2. Fertilizers (Urea, DAP): The mechanism for these imports is as follows:

- In the immediate future, the Ministry of Agriculture and Food Industry shall assign the Central General Company of Agricultural Materials (Vegecam) to import directly 60% of the orientational volume to ensure the timely supply of fertilizers for crops. The Ministry of Trade and the Ministry of Agriculture and Food Industry shall appoint additional enterprises to act as clue dealers beside Vegecam to handle the import of this 60% portion.

- The remaining 40% shall be assigned to businesses which have the capabilities to mobilize capital to import, which shall import the right categories for the righ crops and for the right areas in need and which shall be responsible for their own economic efficiency.

3. Steel:

The General Company of Metals (Vinametal) shall import directly 50% of the orientational volume.

The remaining 50% shall be assigned to businesses which can sign contracts with more favorable commercial conditions.

In regard to special-purpose metals (for railways, bridges, can, water pipes, springs, spiral springs, manufacturing and construction of special projects...), the enterprises are allowed to import such amounts as required by their operation.

4. Portland cement:

- Clinker: The import of clinker shall be assigned to cement-producing enterprises only. The detailed amount for each of the enterprises shall be proposed by the Ministry of Construction.

- Portland cement: The enterprise which can secure a foreign-trade contract of better commercial condition shall be allowed to handle the importation.

5. Explosives: The only dealer is Coalimex (the Ministry of Energy) which shall handle this importation in compliance with a separate regulation.

6. Fiber: Enterprises are allowed to import, for production and trade purpose, fiber which is not yet produced domestically. The fibers are:

- Synthetic and artificial fibers; and

- Sheep wool.

Enterprises which want to import the following fibers shall submit their requests in advance to the Ministry of Trade:

- Cotton fiber of medium quality, with the curve under 50% of the 1989 World Uster statistics.

- Mixed fiber of medium quality, with the curve under 25% of the 1989 World Uster statistics.

The import of fiber which has been domestically produced but which is still below demand must be approved in advance by the Ministry of Light Industry in Terms of category and quantity.

7. Materials: Enterprises are allowed to import according to requirements of production and trade materials not yet produced domestically. These materials include:

- Woolen tissues and wool-based fabrics.

- Materials synthesized from microfiber, acetate, etc.

- High-quality cotton materials with a fiber index from Nm 102 or above.

- High-quality cotton-based materials with a fiber index from Nm 102 or above.

- Special-purpose materials.

The import of materials which have been domestically produced but which are still below demand, must be approved in advance by the Ministry of Light Industry by category and amount.

Importers and exporters, which have export garment factories are allowed to import materials by a mounts prescribed in the export contracts. The application for a license to import materials must be accompanied by the contract for the export of the garment.

8. Jute bag: For the time being, this import is temporarily suspended. In case domestic jute-bag producers fail to meet the requirement of the rice-exporters, contracts shall be considered on a case-by-case basis.

9. Paper: Enterprises are allowed to import paper according to the requirement of production and business papers which are not yet domestically produced. Paper that may be imported includes:

- Paper for cement packages.

- Printing paper and carton with refined surfaces (couche, glossy-surfaced and duplex papers).

- Thin paper (less than 50 gram/square meter) which are domestically producible but not at a high quality.

As for newsprint, quotas priority is given to enterprises which have printing facilities.

10. Materials and additives for making cigarettes: Enterprises with cigarette-rolling facilities are assigned import quotas suitable to the capacity of their facilities.

Enterprises which are licensed to import and export this line of product may also be assigned import quotas in order to supply cigarette-rolling enterprises on the basis of economic contracts.

11. Edible sugar:

- For crude sugar, import quotas are assigned to sugar-refineries under the Ministry of Agriculture and Food Industry. The detailed amount for each of the refineries shall be proposed by the Ministry of Agriculture and Food Industry. The refineries have the right to mandate their import in cases they are not yet licensed to import and export or, when they see that importation through an agency is more efficient than importing directly.

- For crystallized sugar, import quotas are assigned to enterprises which have the capabilities to guarantee that the import shall be delivered in the right volume, in time and to the designated port.

12. Milk: For the time being, the importation of sweetened condensed milk is not allowed. Enterprises are allowed to import milk powder (to produce sweetened condensed milk and powder milk) or high-quality powder milk.

13. Motor bikes and related components:

a) For components, the importation is assigned to the following business entities:

- Vietnamese enterprises licensed to import this category of goods and which have assembling units established by decision of the owing agencies or upon the permission of the owning agencies with recognized ownership over the assembling units, and which are certified by the General Department of Standards, Measurements and Quality (the Ministry of Science, Technology and Environment) as possessed of the conditions for assembling.

- Enterprises which have factories with the above-mentioned conditions but have not yet been licensed for import and export dealings, shall be considered on case-by-case basis by the Ministry of Trade if they have the need to import CKD's for assembling.

- Enterprises set up under the Law on Foreign Investment in Vietnam shall be allowed to import as many components as they are allowed to sell in Vietnam.

Enterprises (Vietnamese enterprises and enterprises set up under the law on Foreign Investment) which have contracts for exportation of motor bike and which guarantee to fulfil those contracts shall be allowed to import components in volumes equivalent to the contracts for exportation of the finished product.

Enterprises which have the need to do this importation shall send to the Ministry of Trade the following documentation:

+ For Vietnamese enterprises, the documents to be submitted include:

- The certificate of ownership over the assembling units issued by the agency which signed the establishment decision or permit.

- The certificate that the assembling units have the adequate conditions for assembly issued by the General Department of Standards, Measurements and Quality (the Ministry of Science, Technology and Environment).

- The establishment permit for the assembling unit.

- The economic-technological blueprint.

+ For enterprises established under the Law on Foreign Investment in Vietnam, the documents to be submitted include:

- The investment license.

- The plan for sales in Vietnam and abroad.

b) For new and complete units, the import shall be assigned in reasonable volumes to enterprises which have been licensed to import and export this category of goods.

14. For automobiles with a seating capacity less than 12 and components; electronic home appliances and components: The principle of volume assignment for the imports of motor bike and components shall apply.

As for electronic parts, if it is deemed necessary to import SKD's, permission must be obtained in advance from the Ministry of Trade.

C. LIST OF IMPORT AND EXPORT ITEMS UNDER GUIDANCE OF SPECIALIZED MANAGERIAL BRANCHES

(List 4)

There are 11 groups of goods which need endorsement by seven specialized managerial branches before being licensed for import and export by the Licensing Bureau (the Ministry of Trade).

1. The Ministry of Agriculture and Food Industry (for import):

- Live animals and fresh plants to be used as seeds.

- Medicine for animals and insecticide.

2. The Ministry of Health (for import):

Medicine and material to manufacture medicine for human diseases.

3. The Ministry of Heavy Industry (for export):

- Minerals.

- Ferrous and non-ferrous scrap metals.

4. The Ministry of Culture and Information (for import and export):

- Books, newspapers, pictures, photographs and other publications of the printing and graphic industries.

- Art works.

5. The State Bank (for import and export):

Oyster pearls, gemstones, semi-precious gemstone, jewelry, and coins.

6. The General Department of Post and Communications (for import and export):

- Radio transmitting and receiving equipment.

- Radar equipment and ranging wave-control equipment.

7. The Ministry of Forestry (for export): wild animals.

The managerial and business mechanism

1. Enterprises which want to import and export goods included in this list shall first send requests to the specialized managerial offices. After they have obtained the written approval of the managerial offices, they shall come to the Licensing Bureau to receive their import-export license, without going through the Ministry of Trade.

2. The import of complete equipments and production chains with State funds shall be executed under Decision No.91-TTg issued by the Prime Minister on November 13, 1992 and the guiding Circular No.4-TM/DT issued by the Ministry of Trade on July 30, 1993.

Part II

IMPORT OF GOODS NOT INCLUDED IN THE LISTS OF PART I

Proceeding from the instruction of the Prime Minister that: "Imports which cost much in foreign exchange and which do not directly serve the needs of production, must be calculated and conducted on the basis of the export value with a view to not allowing too large of an import surplus" (Document No. 1319-KHTH of March 17, 1994).

The Minister of Trade mandates the chiefs of the Licensing Bureaus (the Ministry of Trade) to issue licenses for the import of the goods not included in the said lists based on the following principles:

1. For means of production: Enterprises licensed to trade in a category of goods are allowed to import according to their production needs.

2. For consumer goods not included in List 3: To save foreign exchange, the State does not encourage imports of foodstuffs, fresh and processed vegetables, beverages, garments, cosmetics and household utensils of which there is a sufficient domestic supply. Import which is to trade for foreign exchange or is part of a barter deal (in which the export item is encouraged by the State) shall be considered by the Ministry of Trade.

In regard to a number of other essential consumer goods, enterprises which are licensed to import and export the goods are allowed to import in an amount valued at most from 7-10% of the export value of the 6 previous months.

Part III

IMPORT-EXPORT PROCEDURE

In 1994, the Ministry of Trade will further simplify the import-export procedure as follows:

Enterprises which have import-export license, when exporting goods included in lists 2, 3 and 4, shall apply the procedures described in the previous parts.

For the remaining categories of goods, enterprises need not obtain a license as previously but shall make a declaration customs and send a copy of the declaration to the Ministry Trade for monitoring.

Once the General Customs Office has completed the SYN-DONIA program and the installation of the communication network, the Ministry of Trade shall propose to the Government further simplification of the licensing procedure for imports and exports.

The Ministry of Trade proposes that the ministries, the ministerial-level agencies, the agencies under the Government, the People's Committees of the provinces and cities directly attached to the Central Government and the central offices of the people's organizations notify their enterprises of the contents of this Circular so that they may correctly abide by its prescriptions.

For the Minister of Trade

Deputy Minister

TA CA